The rescue fund for Detroit pensioners and the Detroit Institute of Arts has gotten a $40 million boost from the W.K. Kellogg Foundation of Battle Creek, Mich. / Carlos Osorio, AP

by Mark Stryker, Detroit Free Press

by Mark Stryker, Detroit Free Press

DETROIT -- The rescue fund for Detroit pensioners and the Detroit Institute of Arts has gotten a $40 million boost from the W.K. Kellogg Foundation of Battle Creek.

The foundation announced Tuesday that it was making the pledge to a federally mediated bargain designed to help protect pensioners and the DIA and to lead to a speedier and less painful resolution to the city's historic bankruptcy.

With the gift, Kellogg joins nine other national and local foundations that previously seeded the fund with $330 million in pledges, an unprecedented coalition of foundation support for a troubled American city. Coupled with Michigan Gov. Rick Snyder's $350 million in proposed state funding, the rescue fund now totals at least $720 million.

"We see this as an investment in Detroit, its children and families, and our shared future," the foundation said in a statement.

Kellogg leaders were part of the initial group of foundation officials who began meeting with Chief U.S. District Judge Gerald Rosen in November, but they were still undecided about the foundation's role when the others announced their combined $330 million in support earlier this month. The Kellogg gift is the third largest after $125 million from the New York-based Ford Foundation and $100 million from the Kresge Foundation in Troy.

Spearheaded by Rosen, the federal mediator for the bankruptcy, the rescue fund is aimed at reducing pension cuts, preventing art from being sold to pay city debts and spinning off the art museum from city ownership into a private nonprofit. The fund wouldn't make pensioners whole - emergency manager Kevyn Orr has estimated that Detroit's two municipal pension funds may be underfunded by as much as $3.5 billion - but it would mitigate against draconian cuts while also forever insulating the museum from the vagaries of city politics and finances.

Large hurdles remain before the plan is approved, but the Kellogg gift adds another significant financial building block and increases the chances that a deal could happen.

"Based on the commitments from private foundations and the state, there is clear momentum to facilitate the museum to retain its collection for the benefit of the city and residents," said Craig Barbarosh, a municipal bankruptcy attorney in Costa Mesa., Calif. "It is compelling that many important players have stepped up to protect the art collection and pensions."

Still, Barbarosh cautioned that nothing would be final until U.S. Bankruptcy Judge Steven Rhodes approved Orr's plan of adjustment to restructure city finances. Orr expects to file the plan within weeks. Rhodes will have to judge whether it is fair and equitable to all parities and ensures a future for the city to build upon.

For the plan to go forward, state funding must be approved by a Legislature in which many lawmakers remain suspicious of anything that looks like a bailout of Detroit. The museum will also have to make a financial contribution, and pensioners will likely have to accept financial concessions and perhaps management changes.

Rosen's office issued a statement in which it praised the Kellogg Foundation's contribution as "remarkably generous" and said the mediators would continue to facilitate agreements among as many parties as possible to help "provide Detroit with a prompt and successful exit from the bankruptcy and to move us toward a revitalized and renewed city."

Orr spokesman Bill Nowling said in a statement that the philanthropic community and the state of Michigan's contributions recognize the importance of a mediated solution to the remaining issues in the bankruptcy. "It is time for the remaining parties to also step up and participate in a mediated solution to the benefit of all," Nowling said.

One of the country's 10 largest private charitable foundations with roughly $7.3 billion in assets, the Kellogg Foundation grants about $300 million annually, focusing on the development of children through education and learning, the financial security of families and food and health issues.